Record Earnings Surprises, Gold’s Correlation to Tech and More GDP Figures
August 17, 2020 | FIRESIDE CHARTS
Happy Monday! Q2 earnings expectations as a whole had the largest margin of surprise to the upside in the last decade. This itself was not a huge surprise though after seeing some of the largest downward expectation revisions. While gold typically can act as a “safe haven” for investors in volatile times, we are starting to see it behave more like the S&P 500® Index’s technology sector. This could lead to trouble for investors who are using it for its diversification benefit. And the government stimulus we’ve seen so far has helped differentiate this recession from those of the past…are we facing unintended consequences—such as inability to fund critical programs—in the future? While the 2Q U.S. GDP print is old news, a look at Europe and Japan beg the question… what should we expect of GDP in Q3 and Q4, especially when we are seeing second waves of Covid pop up globally.
1. With the Covid-19 induced pall on earnings expectations, the news for most was much better than expected…
Source: WSJ Daily Shot, from 8/17/20
2. Is gold losing its diversification attribute?
Source: WSJ Daily Shot, from 8/17/20
3. OK, but what happens when all the Government support ends?
Source: WSJ Daily Shot, from 8/17/20
4. With trillions in new Covid related debt, how will Washington handle Social Security funding?
Source: WSJ Daily Shot, from 8/17/20
5. Last quarter’s GDP reports, while widely expected, was some of the worst on record. This is old news, the real question is what will Q3 and Q4 look like?
Source: WSJ Daily Shot, from 8/17/2
6. Similarly, here is Japan’s results:
Source: WSJ Daily Shot, from 8/17/20
7. While California, Texas and Florida appear to have peaked for this round, not so for many other States. Here is Illinois. About 40% of U.S. States are in a second wave…
Source: JHU CSSE, As of 8/17/20
8. Spain is clearly in a second Covid wave. Much of Europe is showing early signs of a second wave…
Source: JHU CSSE, As of 8/13/20
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.